SEGMENT INFORMATION

The Company considers its operating structure and the types of information subject to regular review by its President and Chief Executive Officer (“CEO”), who is the Chief Operating Decision Maker (“CODM”), to identify reportable segments. The CODM makes decisions, assesses performance and allocates resources by the following reportable segments: Europe, Middle East and Africa (“EMEA”), United States & Canada (“USCAN”), Latin America (“LATAM”), Asia Pacific (“APAC”), and Engineered Composites ("EC").

The CODM uses net sales to unaffiliated customers, segment gross profit and segment operating income in order to make decisions, assess performance and allocate resources to each segment. Segment operating income does not include items such as interest income or expense, other income or expense, foreign currency transaction gains or losses, restructuring and related costs including accelerated depreciation, asset impairments, or costs related to the Merger. Corporate expenses include the compensation of certain personnel, certain audit expenses, Board of Directors related costs, certain insurance costs, costs associated with being a publicly traded entity and other miscellaneous legal and professional fees.

The following table summarizes net sales to unaffiliated customers by segment:



	Three months ended February 28,				Six months ended February 28,
	2018		2017		2018		2017
	(In thousands)
EMEA	$	335,671	$	276,902	$	683,091	$	572,974
USCAN	156,452		151,918		315,688		308,336
LATAM	44,982		39,662		93,395		81,878
APAC	57,384		48,914		117,548		99,651
EC	55,609		51,282		114,999		105,839
Total net sales to unaffiliated customers	$	650,098	$	568,678	$	1,324,721	$	1,168,678

Below the Company presents gross profit by segment:



	Three months ended February 28,						Six months ended February 28,
	2018			2017			2018			2017
	(In thousands)
EMEA	$	40,185		$	39,130		$	86,631		$	83,788
USCAN	20,219			20,060			44,847			44,576
LATAM	8,869			9,595			19,071			19,012
APAC	8,922			8,908			18,833			18,034
EC	13,645			12,831			27,624			26,799
Total segment gross profit	91,840			90,524			197,006			192,209
Accelerated depreciation and restructuring related costs	(145		)	(1,338		)	(226		)	(1,865		)
Costs related to acquisitions and integrations	—			—			—			(57		)
Lucent costs ⁽¹⁾	—			—			—			(86		)
Total gross profit	$	91,695		$	89,186		$	196,780		$	190,201

Below is a reconciliation of segment operating income to operating income (loss) and income (loss) before taxes:



	Three months ended February 28,						Six months ended February 28,
	2018			2017			2018			2017
	(In thousands)
EMEA	$	15,166		$	16,527		$	36,266		$	36,295
USCAN	4,713			5,447			12,854			13,943
LATAM	5,071			5,459			11,028			10,894
APAC	4,684			4,901			10,444			9,914
EC	4,267			4,111			9,523			9,222
Total segment operating income	33,901			36,445			80,115			80,268
Corporate	(8,521		)	(9,065		)	(17,922		)	(17,881		)
Costs related to Merger and integrations	(4,569		)	—			(5,049		)	(605		)
Restructuring, strategic and related costs ⁽²⁾	(4,222		)	(4,970		)	(8,111		)	(18,243		)
Accelerated depreciation	(57		)	(467		)	(235		)	(823		)
Lucent costs ⁽¹⁾	(3,317		)	(596		)	(6,092		)	(1,405		)
Asset impairment	—			—			—			(678		)
Gain (loss) on sale of assets	—			—			3,077			—
CEO transition costs	—			(6		)	—			(196		)
Operating income (loss)	13,215			21,341			45,783			40,437
Interest expense	(13,435		)	(13,107		)	(26,876		)	(26,271		)
Foreign currency transaction gains (losses)	(483		)	(1,081		)	(1,270		)	(1,643		)
Other income (expense), net	849			(674		)	1,746			459
Income (loss) before taxes	$	146		$	6,479		$	19,383		$	12,982

⁽¹⁾Refer to Note 13 in this form 10-Q for additional discussion on this matter. Lucent costs in cost of sales include additional product and manufacturing operational costs for reworking inventory. Lucent costs in selling, general and administrative expenses include legal and investigative costs.

⁽²⁾ Restructuring expenses for the three and six months ended February 28, 2018 of $0.1 million and $0.6 million, respectively, and for the three and six months ended February 28, 2017 of $1.9 million and $11.4 million, respectively, included in restructuring expense in the Company’s statements of operations include costs permitted under ASC 420, Exit or Disposal Obligations, such as severance costs, outplacement services and contract termination costs. Strategic and restructuring related costs for the three and six months ended February 28, 2018 of $4.1 million and $7.5 million, respectively, and for the three and six months ended February 28, 2017 of $3.1 million and $6.8 million, respectively, primarily included in selling, general and administrative expenses in the Company’s statements of operations, are costs associated with professional fees for outside strategic consultants regarding actions to improve the profitability of the organization, improve efficiency of its operations or comply with new legislation, costs associated with reorganizations of the legal entity structure of the Company, and costs associated with new software implementation that are not eligible for capitalization.

Globally, the Company operates in three product families: Engineered Composites, Custom Concentrates and Services, and Performance Materials. The amount and percentage of consolidated net sales for these product families are as follows:



	Three months ended February 28,
	2018				2017
	(In thousands, except for %'s)
Engineered Composites	$	55,609	9	%	$	51,282	9	%
Custom Concentrates and Services	304,454		46		259,586		46
Performance Materials	290,035		45		257,810		45
Total consolidated net sales	$	650,098	100	%	$	568,678	100	%



	Six months ended February 28,
	2018				2017
	(In thousands, except for %'s)
Engineered Composites	$	114,999	9	%	$	105,839	9	%
Custom Concentrates and Services	625,655		47		535,505		46
Performance Materials	584,067		44		527,334		45
Total consolidated net sales	$	1,324,721	100	%	$	1,168,678	100	%